Central Freight Lines Closing After Nearly a Century in Business

Exclusive: Central Freight Lines to shut down after 96 years

Central Freight Lines, the Waco, Texas-based less-than-truckload carrier, will begin winding down operations after 96 years in business, putting more than 2,100 employees out of work just before Christmas.

The company notified drivers, employees and customers that it would stop accepting new shipments on Monday, Dec. 13, 2021. Central Freight said it expected to deliver substantially all freight already in its system by Dec. 20.

“It’s just horrible,” Central Freight President Bruce Kalem told FreightWaves.

The closure makes Central Freight Lines the largest trucking company to shut down since Celadon ceased operations in 2019. The company employed approximately 1,325 drivers, operated about 1,600 power units and maintained 65 terminals before deciding to close. About 820 employees were based at its Waco headquarters.

For drivers and customers, the immediate focus was on completing deliveries, maintaining access to fuel and ensuring employees were paid for work already performed. As of Saturday night, Kalem said fuel cards remained active and drivers would be paid for freight hauled through the end of the wind-down.

“We are going to pay our drivers,” Kalem said. “We are going to deliver all of the freight that’s in our system by next week, and we believe we can do that.”

Debt and operating losses behind closure

Central Freight said years of operating losses had depleted its liquidity. A source close to the company said it had accumulated too much debt and too many unpaid bills to continue operating, despite efforts to keep the business open.

Kalem confirmed that operating losses and long-running financial difficulties had left the company without a viable path forward.

“Years of operating losses and struggles for many years sapped our liquidity, and we had no other place to go at this point,” he said.

In a statement, Central Freight said its liabilities substantially exceeded its assets and that the company’s assets were subject to liens held by multiple creditors. The carrier said it had been unable to secure financing for ongoing operations, find a buyer for the entire business or obtain funding for a Chapter 11 reorganization.

A source familiar with the company said it was unclear whether Central Freight would file for Chapter 7 bankruptcy or liquidate outside of bankruptcy. However, the company had no plans to reorganize, according to the source.

Attempts to save the company

Central Freight reshuffled its executive leadership nearly a year before the closure in an effort to stabilize the business. Company owner Jerry Moyes became interim president and chief executive officer. Kalem later became president in July, while Moyes remained chief executive.

Kalem said Moyes invested substantial money in the company, but the funding was not enough to overcome its financial problems. Potential buyers reportedly showed interest in portions of the business, but no buyer emerged for the entire carrier.

One source suggested that the size and geographic reach of Central Freight’s network may have made a full-company acquisition difficult. Buyers interested in individual locations or operations could already have had terminals and employees in overlapping markets.

The company also explored selling equipment and coordinating with other regional LTL carriers to help employees find work. Central Freight said it was negotiating the sale of a substantial portion of its equipment, although no asset purchase or employment offer had been guaranteed.

GlobalTranz, a third-party logistics provider, removed Central Freight as a blanket and carrier-selection option to prevent new shipments from being booked during the wind-down.

Impact on drivers and the LTL network

The shutdown will affect drivers, dockworkers, mechanics, office staff and terminal employees across Central Freight’s network. The company’s regional coverage included a broad portion of the United States, and its 65-terminal system connected shippers with LTL freight service across multiple markets.

Kalem said he was aware of a large carrier interested in hiring many Central Freight drivers, but he could not identify the company. Central Freight also said it was working with other regional LTL carriers to create opportunities for employees to apply for jobs near their current locations.

The closure also means customers must quickly find replacement capacity for shipments previously handled by Central Freight. LTL carriers move smaller shipments that do not fill an entire trailer, making terminal networks, dock operations and scheduled linehaul connections especially important to shippers and drivers.

Central Freight received the maximum $10 million award available through the federal Paycheck Protection Program during the early stages of the pandemic. Kalem said the funds were used for payroll. He also acknowledged that employees and drivers had taken pay cuts in prior years, although some of those reductions were later restored and pay was increased in the months before the closure.

A company with deep Texas roots

Central Freight Lines was founded in Waco in 1925 by Woody Callan Sr. The company began regular routes between Dallas, Fort Worth and Austin in 1927 and expanded over the decades into a multistate LTL carrier.

Its history included periods of expansion, ownership changes and acquisitions. Central Freight was later combined with other operations under Viking Freight before senior management acquired assets and reopened the company as a new Central Freight Lines in 1997. The carrier subsequently expanded into additional states and acquired regional operations, including Circle Delivery, DTI and Volunteer Express.

In its closing statement, Central Freight thanked its employees, customers, vendors, equipment providers and other stakeholders. The company said its priority was to complete a safe and orderly wind-down while maximizing the funds available to address its obligations.